Solar stocks ‘under owned:’ Cowen & Co.

SAN FRANCISCO (MarketWatch) — Solar-power companies have attracted fewer investors than what’s warranted by their performance, with “solid growth” in store for the months ahead, analysts at Cowen & Co. said in a note Wednesday.

Despite some lackluster second-quarter results, several solar companies have told Wall Street they expect double-digit growth in the second half of the year, a period that traditionally has made up for the seasonally lackluster first and second quarters. But skeptics fear companies have too much catch-up to do in the third and fourth quarters to make this year a positive one.

For Cowen, catalysts for a better second half include more clarity on the trade war between the U.S. and China, and expectations the Chinese government will reach its goal of installing an additional 13 gigawatts of solar power by the end of this year.

“We see this as an ambitious target but not one that can easily be dismissed,” said the Cowen analysts, led by Jeffrey Osborne.

Cowen kept its ratings and price targets for the companies in the sector intact.

China’s solar residential market is starting to show signs of life as subsidies are rolled out. So far about 3.3 gw have been installed. China installed more than 8 gw in the second half of 2013, the analysts added.

China is the world’s No. 2 in solar-power capacity after Germany.

Shares of most solar-panel makers traded higher on Wednesday. The Guggenheim Solar exchange-traded fund
TAN, -2.02%
rose 1.3%, while U.S. stocks traded lower, largely on losses for Apple Inc. For the year, the Guggenheim Solar ETF has leapt 53%, compared with a gain of 8.5% for the S&P 500 index.
SPX, -0.23%

The Cowen analysts said Trina remains one of their top picks, alongside SunPower Corp.
SPWR, -4.79%
Trina is “well positioned” in key markets such as the U.S. and the U.K., and it is adding capacity, they said.

Solar-power developer SunPower rose 1.1%.

Among the day’s few decliners, shares of Canadian Solar Inc.
CSIQ, +0.32%
declined 2.3%. Solar-power installer SolarCity Corp.
SCTY, -2.65%
was off 0.1%.

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